The Hops Shortage is Realized

The media has been flooded in the past 3 months or so with stories about the world-wide hops shortage – if you don’t know about it by now, you’ve been living under a rock; beer drinker or not – so I don’t want to beat a dead horse but I think this afternoon was the first time it’s really hit home for me.

This afternoon I was in Gray, Maine doing something for my day job, so on my way back to the office I stopped in to pay a visit to my favorite Local Homebrew Supply Shop (The Hop Shop in Gray) and say hi to Ed, the owner. So anyway, we got to shooting the breeze and I asked him how he was making out with the shortage (we hadn’t seen each other in a few months); he just looked at me with a completely serious face and said, point blank, “it fucking sucks!”

What hops varieties he can get (most varieties aren’t available) he’s rationed to 10 pounds an order – which is next to nothing compared to what he was ordering pre-shortage. He has to offer creative alternatives to nearly every customer through his doors because they simply cannot brew what they’re looking to brew. Ed has even had commercial breweries call him begging for a spare 10 pounds.

The good news for Ed, he explained, is that homebrewers should be fine. Experimenting and adapting recipes is at the core of homebrewing, so doing so will be embraced. And, if you’re brewing 5 or 10 gallon batches of beer, chances are you’re only adding one or two (certainly not more than four, usually) ounces of hops. And the big, commercial breweries will be fine too – they have the leveraging and bargaining power necessary to secure the hops they need at the price point which they demand. Who suffers the most are the small-time, local breweries we all know and love. They brew too much to be able to get by on homebrew rations but cannot leverage the price or pounds they really need.

Nor could Ed really offer any insight to when the madness will end. Some aid will come in the fall when its harvest season again but,

“Australia is in the midst of a 5-year drought, which doesn’t seem to be ending any time soon… I mean, it’s their summer right now and we’re not seeing anything. And any new plants that are planted around the world, take at least three years to reach maturity, so we’ll be waiting at least that long for things to return to normal”.

What it will come down to is adapting, experimenting, and creativity. But that’s really what craft beer is all about, right? That’s what sets it apart from the big boys – it’s a craft; an art form. As Ed told me today,

“It might mean fewer hop-heavy IPAs but I’m not ready to change the name of my shop quite yet”.

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Ed is anticipating a return to “normal” in three years? Good luck with that.

The number of domestic hop operations declined from 2,000 to under 100 due to a decade of irrational pricing. Starting a hops yard these days is incredibly expensive – farmland has doubled in price, not to mention steel for the trellis systems, fertilizer, farm equipment, energy, etc.

A new operation will have a higher cost basis than existing operations – by at least 50%. Now, that is a delightful business prospect – become the high-cost producer of a commodity product!

The Willamette Valley in both Washington and Oregon are fast growing regions, as is the Treasure Valley in Idaho. A lot of former farmland in hops country has been converted into subdivisions. Maybe those with subprime mortgages should just be plowed under, LOL.

The farm bill passed last December pretty much guarantees that corn will dominate the agricultural scene for the next five years. Last year 25% of the corn crop went to ethanol production. Any land that can grow corn probably will.